Withheld GST refund tied to transitional credit must be released with interest once the credit is allowed; no fresh application required.

Where a refund was withheld only because transitional input tax credit under the CGST Act was disallowed, later allowance of that credit on remand removed the statutory basis for withholding. The withheld amount then became payable with applicable interest, and no fresh refund application was required. The text also notes that the amount was not part of the separately sanctioned refund, but was retained solely due to the earlier credit disallowance.

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Issues: Whether the amount of refund withheld because of disallowance of transitional input tax credit under the GST regime was required to be released, along with interest, after the credit was later allowed on remand, and whether a fresh refund application was necessary.

Analysis: The petitioner's transitional credit claim under Section 140 of the Central Goods and Services Tax Act, 2017 had earlier been disallowed, and the corresponding refund amount was withheld under Section 54(11) of the Central Goods and Services Tax Act, 2017. On remand, the claim was allowed. The withheld amount was not part of the unrelated refund already sanctioned under the refund application, but was retained only because of the earlier disallowance of transitional credit. Once the credit was allowed, the statutory basis for withholding ceased, and the amount became payable under Section 54(12) of the Central Goods and Services Tax Act, 2017. No fresh refund application was required in these circumstances.

Conclusion: The withheld refund amount had to be released to the petitioner with applicable interest, and the plea that a fresh refund application was necessary was rejected.

Final Conclusion: The decision directed release of the withheld amount with interest and treated the writ petition as finally concluded in the petitioner's favour on the refund issue.

Ratio Decidendi: Where refund has been withheld only because a linked transitional credit claim was disallowed, and that credit is subsequently allowed, the withholding ceases to have legal basis and the amount must be released with interest without insisting on a fresh refund application.

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